Business Law & Compliance

Lawsuit against fugitive claiming to have 50% stake in Facebook has been thrown out

1 min read

30 December 2015

Deputy Editor, Real Business

Facebook has been in for a rough month – after facing two class action lawsuits over its 2012 IPO, a contract CEO Mark Zuckerberg supposidly signed in 2003 has come back to haunt him.

Paul Ceglia, a wood pellet salesman, sued Facebook CEO Mark Zuckerberg in 2010 for allegedly signing a contract in 2003 to do programming for his company Street Fax – which Ceglia claimed entitled him to half of Facebook.

Federal prosecutors later deemed the contract to be a forgery and brought criminal charges against Ceglia. However, while free on bail ahead of a trial, he removed his electronic ankle bracelet and disappeared.

In May, state supreme court justice Eileen Rakower said Facebook and Zuckerberg could pursue claims that DLA Piper, Milberg and Lippes Mathias Wexler Friedman knew there was no basis for Ceglia’s civil lawsuit.

But the appeals court noted the law firms had found experts to counter Facebook’s claim that the 2003 contract was forged, and that Ceglia had passed a lie detector test.
The court claimed Facebook’s allegations lacked probable cause.

“We are disappointed,” a spokeswoman said. “DLA Piper and the other named law firms possessed evidence proving the case was based on forged documents and that Paul Ceglia’s claim was a fraud, but chose to pursue it anyway. We believe they should be held accountable.”

Matthew Dontzin, a lawyer representing DLA Piper, said Facebook and Zuckerberg sued solely “to deter lawyers from taking them on. These types of bullying tactics have no place in the courthouse and today justice was done.”